This solutions manual is a valuable companion volume to the classic textbook Recursive Methods in Economic Dynamics by Nancy L. Stokey, Robert E. Lucas, Jr., and Edward C. Prescott. The exercises in the Stokey et al. book are integral to the text, and thus, a reader cannot fully appreciate the text without understanding the results developed in the exercises. This manual provides detailed answers to the central exercises in Recursive Methods.
The authors’ selection of exercises is designed to maximize the reader’s understanding of Recursive Methods. Solutions are presented to every question in the core chapters on recursive methods, as well as most questions from the chapters on mathematical background. Some questions from the chapters on applications of these techniques to economic models have been reserved so as to provide instructors with a crucial “test bank” of questions.
Efficient and lucid in approach, this manual will greatly enhance the value of Recursive Methods as a text for self-study.
[Recursive Methods in Economic Dynamics] is a tour de force. The authors present a unified approach to the techniques and applications of recursive economic theory. The presentations of discrete-time dynamic programming and of Markov processes are authoritative. There is a wide-ranging series of examples drawn from all branches of the discipline, but with special emphasis on macroeconomics. In the short run, the book will be a vital reference in any advanced course in macroeconomic theory. In the long run, it may help to remove the traditional boundaries between microeconomic theory and macroeconomic theory.
[Recursive Methods in Economic Dynamics] is a wonderful collection of results on the techniques of dynamic programming with great applications to economics written by giants in the field.
A magnificent work that is bound to have immense influence on the ways economists think about dynamic systems for many years to come. My own guess is that [Recursive Methods in Economic Dynamics] will eventually acquire the stature, say, of Hicks’s Value and Capital or Samuelson’s Foundations.
- 304 pages
- 6-1/8 x 9-1/4 inches
- Harvard University Press
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